November 4, 2011 / 12:31 AM / 6 years ago

UPDATE 1-Dynegy terminates exchange offers of unit

* Power producer makes announcement near deadline

* Dynegy had shopped unit’s prepackaged bankruptcy

Nov 3 (Reuters) - Independent power producer Dynegy Inc announced on Thursday the termination of offers to exchange up to $1.25 billion principal amount of outstanding notes of a subsidiary that may be facing bankruptcy.

The company had offered bondholders $1.25 billion of cash and new secured notes for outstanding bonds, but that offer has failed to garner much support and the deadline was Thursday at midnight.

In a press release, Dynegy Inc made the announcement terminating the exchange offers in its Dynegy Holdings unit.

“Beyond that, I don’t have any comment,” spokeswoman Katy Sullivan said when reached by telephone.

Last week, sources said that the debt-laden Dynegy Inc has been discussing with bondholders a plan to put the subsidiary into bankruptcy after bondholders shunned the $1.25 billion refinancing.

The company has been struggling with a mountain of debt and its power business has been squeezed by rock-bottom natural gas prices.

The proposed bankruptcy would not affect parent company Dynegy Inc, whose shareholders include billionaire investor Carl Icahn and investment firm Seneca Capital.

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